The dispute at the Committee on Finance Friday was not about adding $3 million to specified contribution to Government Employees’ Retirement System. It was about what to call the money.
GERS Administrator Austin Nibbs was for both parts of legislation sponsored by Sen. Donna Frett-Gregory, which would increase the amount remitted annually to the GERS from $7 million to $10 million and calling the funds a direct contribution to the GERS instead of being designated towards outstanding employer contributions. Nibbs said the change in designation of the funds would allow him to invest it.
Sen. Kurt Vialet, who sponsored the legislation Frett-Gregory was proposing to amend, was against the change in designation. He was concerned funds would not be there for retirees who retired and then found that the employer (the central government) had not made its contribution.
A compromise may be on the way.
At the end of the hearing committee chairwoman Frett-Gregory said both sides had been heard and indicated a compromise was probably the solution. The act will be held in committee for further consideration. During the hearing Vialet suggested a compromise of 50 per cent of the funds being designated a direct contribution and 50 per cent being designated for missing employer contributions.
His concern arises from times when employees retire and find that thousands of dollars are missing in employer contributions to their retirement account. GERS refuses to initiate annuities until an employee’s account is paid in full. The government would claim it had no funds to pay the missing contributions and the retiree could go a year or more without receiving a check. Vialet’s bill addressed the problem by appropriating funds to be set aside to be applied to any retirees missing employer’s contributions.
The missing employer contributions often occur when an employee is first hired. The employer’s contribution is not always initiated on a timely basis.
Jenifer O’Neal, director nominee of the Office of Management and Budget, testified against the amendments but said she had good news for retirees. She said the OMB released $21 million to GERS on Feb. 14 for years 2013, 2014, and 2019 and; on March 5, OMB released an additional $1.8 million for the outstanding balance owed for 2017.
She said that raising the amount to $10 million would put an added strain on the General Fund. She also objected to the change in designation because, “While OMB understands the need for funding of some of these unfunded mandates, we are also cognizant of the need to reduce the outstanding employer contributions and not compound the outstanding sum with further charges for delinquency fees and lost investment penalties.”
Currently, the outstanding employer contribution to GERS is $72 million – $67 million is owed for member’s benefits, $4 million is assumed for lost investment, and $1 million is owed in delinquency fees.
Helen Hart, representing Government Retirees United For Fairness, said the organization supported the measure, but added, “GRUFF continues to recommend that for the survival of GERS the unfunded liability issue needs to be address and needs to be address sooner than later.”
Frett-Gregory stated several times that her measure was just the start in the legislature’s efforts to resolve the financial problems at GERS.
“It is time we realize, if GERS goes south, we all go south,” Frett-Gregory said.
GERS has 8,597 retirees on its rolls. Its biweekly pay out is over $10 million.